Oil Search
has increased its 2014 production forecast by about 16 per cent thanks to the early start to production of the $US19 billion Papua New Guinea liquefied natural gas venture, which has just shipped its first cargo.

Output this year is now expected to be between 17 million and 20 million barrels of oil equivalent, up from an earlier forecast of 14.5 million to 17.5 million boe, Oil Search said on Wednesday. Of the total, up to 13.2 million boe is expected from the ExxonMobil-operated PNG LNG venture, with the rest from Oil Search’s existing operations.

Managing director
Peter Botten
said the increased output forecast would also push down cash operating costs on a per-barrel basis. Those cash costs are now expected to be between $US18 and $US22 per barrel of oil equivalent of production, down from an earlier forecast of $US21 to $U26 per boe.

Mr Botten said the start-up of the two-train project had gone well, and the venture reached another milestone on Tuesday with the arrival of the first LNG cargo at Tokyo Electric Power in Japan.

Oil Search is Exxon’s biggest partner in PNG LNG, in which Santos, Nippon Oil, local landowners and the PNG government have stakes.